Giant CRS grapples with revenue fall, seeks county help

March 24, 2012|By ARNOLD S. PLATOU | arnoldp@herald-mail.com

Number of ambulance calls.

In Washington County’s world of emergency medical services, Community Rescue Service is the giant.

Two years ago in 2010, Hagerstown-based CRS had 12,153 runs — easily more than half the 20,066 calls handled by all eight of the county’s EMS companies, according to figures from the county Division of Emergency Services.

And last year, the demand for help from the volunteer-owned CRS jumped to nearly 13,000 calls.

All this comes at enormous cost — more than $3.5 million from July 2010 through June 2011, the company’s most complete budget year.

In large part, CRS has been handling the cost itself, rebounding from financial crisis seven years ago to a sizeable reserve now.

But in recent months, trouble has arisen again, forcing the company to ask the county government this month for financial help for at least the coming budget year.

Subsidies bring stability

In summer 2010, the county government began giving each of the EMS companies a special subsidy in recognition of the difficulties all have faced in attracting volunteers — at a time when the county wants to ensure emergency medical response is available 24/7 throughout the area.

In all, the county allocated $1.66 million for its special staffing subsidy, enabling the companies to hire full EMS staffs and pay them wages competitive enough to dim the luster of metro-area EMS salaries that had been luring many away.

For the county’s seven smaller EMS companies, the county’s special subsidy is based on the need to have at least one ambulance staffed and ready to go 24/7. The exact amount of aid depends on how much of that cost each company can pay after billing insurers and patients.

The county’s special subsidy for CRS is figured differently because its operations are so much larger than any of the others, according to Assistant CRS Chief Dave Hays.

But being the largest hasn’t meant it receives the highest subsidy.

Hays, who was on the county committee that recommended the subsidies, said the main aim especially was to help the smaller companies because most of them are so limited by their rural areas in terms of raising money.

“So what we’ve done with this EMS plan is stabilize and provide coverage,” Hays said.

Since the subsidy began in summer 2010, CRS has been receiving a special staffing subsidy of $300,000 a year. Sharpsburg Area Emergency Medical Service, which in 2010 had 658 calls — less than 6 percent of the CRS calls — is getting $309,235 a year.

Not only does CRS have a headquarters station off Eastern Boulevard, but it has substations in Hagerstown’s West End and in Maugansville. And it has 71 employees and about 90 volunteers.

“You can’t consider all of our billing revenue as going into salaries because of the overhead of having seven, eight ambulances, and a lot of buildings. All those things add up to a lot of money,” Hays said.

The 12,153 calls on which CRS ran during 2010 kept CRS so busy it needed at least four ambulance crews ready to go at any moment, based on national standards.

Revenue dropping

By early 2011, the demand on CRS for ambulance service still was rising and CRS hired enough additional people to provide a fifth ambulance crew during the daytime at its Eastern Boulevard station.

It bore that additional expense itself, but as early as last May and then solidly through the winter of 2011, “we saw a change in our net billing revenue to the negative,” Hays said.

The money it got back from billing began dropping by $10,000 a month and that has continued, he said.

Company officials don’t know whether that’s because the unemployment rate is still high and fewer workers have health insurance, he said.

“With that, we were not able to continue the staffing for that (fifth) daytime unit,” he said, and CRS also has trimmed its budget in several other areas.

But the demand for services is still there.

In 2011, CRS ran 12,970 calls — a 6.7 percent increase in one year, DES figures show. Overall, the demand on all eight EMS companies jumped by nearly as much, rising that year to 21,303 calls, which is a 6.1 percent increase.

So on March 13, the county Volunteer Fire and Rescue Association — at the request of CRS — and DES Director Kevin Lewis asked the County Commissioners to increase their special subsidy to CRS by $150,000, bringing its special staffing subsidy to $450,000. The increase would begin July 1 and continue through June 30, 2013, which is the 12 months of fiscal year 2013.

That would mean CRS could resume staffing a fifth ambulance during the daytime, Hays said.

He said that subsidy increase might only be needed for one year if the company’s billing revenues begin rising again.

“We are aggressively working on income in relation to billing,” he said.

Its own fleet

At present, CRS has seven ambulances. The extras are put into service often, when accidents or other emergenies happen, and more are needed.

And the extra ambulances replace others when they need to go out of service for maintenance.

CRS is buying two new ambulances, both of which are expected to arrive in April. One will replace an older ambulance that’s being retired and the other, because of increasing demand, is needed to expand the company’s fleet, Hays said.

In addition to the staffing subsidy, the county gives each EMS company a basic subsidy of $48,000 a year.

With three stations of its own, CRS gets $48,000 for its Eastern Boulevard headquarters and $48,000 more for its Maugansville substation. But so far, it receives nothing extra for the substation it opened in Hagerstown’s West End in 2010.

The county also reimburses each of the EMS companies for its utility bill payments, and ambulance fuel and maintenance expenses. To get paid, the companies must turn in receipts.

Each company is required to give the county an annual financial report and to meet standards covering staffing, purchasing, billing and response to calls for help.

“That money, we need to show that we aren’t going out and sending our people on vacations,” Hays said.

Reserves and uncertainty

Despite the expenses CRS has and the service it provides, the ambulance company appears on paper to have managed its finances well.

By last July, at the end of the first budget year for which CRS had received the staffing subsidy, the EMS company reported it received $291,077 more in total revenues than it spent.

That was nearly the amount of the county’s $300,000 subsidy.

That $291,077 included $158,529 earned in dividends and interest — increasing the company’s total cash and investments balance to $1.98 million, according to its financial report.

Why does CRS need so much money?

Virtually all of it is in reserve for upcoming needs and as a financial safety net, said Terry Trovinger, who is chief financial officer at CRS.

Of the $1.98 milllion, he said:

$300,000 will be spent next month to pay the balance due on the two new ambulances.

$200,000 is set aside so far to buy land and to build a new CRS substation in Maugansville. In all, $550,000 has been budgeted for that project.

About $116,000 is needed to offset the deficit projected in the current budget year, as billing revenues continue to fall.

$915,000 is set back as an operating reserve. The amount equals the cost of running CRS for about three months — a financial backup considered “good practice when you get to be our size.”

$100,000 is set back as a so-called maintenance reserve to cover the cost of any unexpected ambulance breakdowns, “which we’re over-extended our budget this year.” The county government will cover the cost of up to $13,500 in such repairs on each vehicle “and we’ve exceeded that this year.” And the maintenance reserve covers unexpected roofing, plumbing or other structural needs.

$300,000 is kept in CRS’s checking account to meet the expenses of providing emergency medical service, before payments arrive from the patients treated and/or their insurance companies.

That leaves roughly $49,000 which hasn’t yet been allocated.

And there’s a painful reminder in the ambulance company’s past of the need for having ample finances in reserve, Trovinger said.

“We basically need that because in prior years, there was a financial strain,” he said. “You need to build that up because we’re running seven ambulances and looking at getting another.

“You can say, ‘They have a lot of money.’ Yeah, but there’s a lot of uncertain things out there,” he said.

For CRS, there is a constant uncertainty over whether revenues will be sufficient to sustain the company’s responsibility for much of the county’s emergency medical transport, he said.

Just a few years ago, the company’s financial health wasn’t so good, he said.

Before he was hired by CRS in 2005, Trovinger said, he was an executive with a local bank from which CRS had taken a loan, so he was “very much aware” of financial problems at the ambulance company.

When he came to CRS, he said, “there was something like $50,000 in the bank” — not much money, given the size of the EMS company’s operation and the uncertainty of revenues.

Part of the problem was that CRS wasn’t trying very hard to get reimbursed for its services, Trovinger said. In 2005, a priority became, “Hey, we were called 25 times today and we really need to send out 25 bills,” he said.

Now, using three of its part-time employees, CRS bills for most of its runs. The 20 percent for which it doesn’t are those in which the patient doesn’t have health insurance or any other means to pay the bill, Trovinger said.

Millions go uncollected

Of the runs for which CRS bills, there is uncertainty over how much it will be paid.

In general, Trovinger said, “we get paid for a little bit over or under half of what we bill.”

For instance, from July 2010 through last June, CRS sent out bills totaling $5.63 million, he said. Its collections from insurers and patients netted $2.77 million or 49 percent of what was billed, he said.

CRS has to write off the difference, he said.

The write-offs include the reduced amounts that Medicaid, Medicare and private insurers will pay, he said.

With Medicaid, “we only get like $100 for a run that costs us $250,” he said. “It depends on what’s done. Like, you have an IV put on you or whatever.”

Then, too, there’s the danger that Trovinger said he experienced with another organization, when Medicaid cut its funding levels dramatically.

“If something like that happened here or with the health care bill or anything like that, it could have a substantial effect,” he said.

If that funding was ever halted and CRS had no financial reserves, he said, the city or county government would have to provide the ambulance service.

“With a reserve, we can give government a heads-up. We can say, ‘Hey, we can survive here for maybe a year or two. You all are going to have to plan.’”

For CRS, the planning includes its financial reserve.

“We’re not going to sacrifice our job with the community or anything to do with patient care,” Trovinger said.

“And with the number of runs we have running close to 1,000 a month, we need to be sure we can maintain those runs with the proper number of staff and the proper amount of equipment,” he said.